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news
planet-x-sheffieldPlanet X customers on the continent being asked to pay UK VAT amount as well as EU VAT
A Briton living in Germany has complained that Planet X is not removing UK value added tax (VAT) from its prices for EU customers in the wake of Brexit. The initial price quoted on the brand’s website remains the same for customers on the continent, even though there is no UK VAT to be paid and despite there being EU VAT and import duty still to be paid on top of that.
We’ve previously reported how the UK’s new rules on VAT are having an impact on brands and retailers in the EU selling to customers in the UK – with some having suspended, whether temporarily or permanently, sales to consumers here.
A corollary of this is that UK retailers no longer need to pay UK VAT if a product is being sent to a customer in the EU.
The prices listed on Planet X’s website, however, remain the same regardless of where a bike is being shipped.
An anonymous road.cc reader in Germany who is looking to buy a new bike spotted this and queried it with Planet X.
The firm said this was a policy and not merely an issue with their website.
“We charge a flat rate to all customers but UK customers prices include a VAT element,” said a representative. “The price remains the same regardless of location, but it will not include a VAT element if you are not in the UK.”
The would-be buyer pointed out that in the wake of Brexit, a Planet X bike shipped to the EU would now also be subject to 14% duty tariffs. (This works both ways, so products coming into the UK from Europe which don’t meet the required percentage of European origin are also subject to these charges.)
“They just don't even care about the amount they charge people, and openly admit to pocketing the element of the price that would in the UK have been paid to the VAT man,” he said.
“It means the buyer is paying the VAT-inclusive price in the UK, plus VAT in the EU, plus 14% import duty, plus the fee of the courier, plus the delay in the delivery while it is paid/sorted – plus they’re not able to send it back in reality even if they wanted to.”
Lamenting the wider situation, he added: “I just think it is fair that buyers in the EU know this up front. There are a good number of us Brits living in the EU that would love to continue supporting the UK bike industry, but now can't.”
Alex has written for more cricket publications than the rest of the road.cc team combined. Despite the apparent evidence of this picture, he doesn't especially like cake.
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35 comments
Very disappointing from PX. Inmoral. I've bought a load lf stuff from them over the years, and always been delighted but, as I'm Spanish it looks like I won't be using them again. Very true previous comment about vast price rises on (especially) frames and stuff, far more than the Covid effect on all bike firms. And they always ripped you off on the exchange rate, to the tune of about 10%, but it was OK 'cos they still had some grat deals. A great pity.
Can anyone confirm if this will apply for parts bought from PX (value under £135)? I am a brit living in Sweden and was about to order, when I thought I'd check on the import fee situation and came across this story. Thanks.
Just... don't even think about it.
It's taken me 6 WEEKS to get an agreement from them that they will refund me for a bike I bought but was unable to take delivery of due to their incompetence with paperwork. They charged VAT but claimed they didn't, the invoice did not match the receipt, and they could not provide an accurate invoice that would satisfy the Portuguese authorities. They tried to retain a restocking fee.
No amount of savings is worth the pain of dealing with them if something goes wrong. And it probably will.
In fact, I suspected they might play this, which in perverse terms could be slightly better for customers (not PlanetX though). I read up on this, and if a UK supplier charges VAT incorrectly the customer is then entitled to reclaim it from the UK VAT authority. But, you can only do it if it has actually been charged on an invoice as forming part of the total price paid. This would eventually mean that PlanetX were "down" on that extra profit that they were trying to load onto EU customers (as they would have to pay it back to VAT in UK). I still would not buy from them due to the massive risk and the additional 14% duty to pay, plus courier admin fee, plus EU VAT. Other UK firms are being far more transparent. Once the biking gold-rush is over, PlanetX will have only the UK market as potential customers (if they do not build an assembly plant somewhere in the EU)
PX customers in Europe should be aware that this is still happening as of February 2021.
The "including VAT" price to UK customers is charged to export customers, but PX does not account to the importing country for VAT. EU customers are thus paying 20% higher prices, plus VAT, customs duty and charges in their country of residence.
The reason is presumably "cos we can". It has nothing to do with Brexit confusion, as PX have had lots of export customers for years (e.g. US, Aus/NZ). All they would have to do is zero-rate the VAT.
I have been reliably informed that correct export VAT invoices have been issued to EU customers showing the gross UK price (i.e. excluding VAT) and VAT zero-rated. But the customer is still being charged the full UK price (that is, what you would pay inc. VAT as a UK customer).
It's one thing if this was just a good opportunity to get a COVID dividend, but there does not appear to be proper or adequate disclosure on the website. Existing EU customers will expect to pay duty, but not realise there is an effective 20% price increase. I am a longstanding customer and not directly affected, but will be ordering from other UK suppliers in future.
This is indeed what they are doing, in terms of openly pocketing what would have been the VAT element of the UK price (when you challenge them - not stating it on their site). EU customers would indeed pay the 20% extra on that part, but then the 14% and EU VAT is levied on that much higher base price as opposed to the ex-VAT UK price. If you do the maths on that, not only do PlanetX run off with that extra lump sum on top of the already overly inflated UK COVID prices they are seeking today, they leave you with an even extra tax and duty liability in the process... By the way, there is also a courier fee to pay for them having put it through the customs/tax process on your behalf. This appears to mean therefore that once you accept it at your door in the EU all the promises of being able to return it are off the table (as you would need to do a further export/import to get it back to the UK). Buyer beware!
I can confirm this. I 'bought' a Space chicken last week, it was built and shipped promptly but that's where the problems started.
Despite charging me the UK price including vat, the invoice shows the sale zero rated for VAT, and at a lesser amount than I was charged. When queried, I get the response as above, that 'the price is the same for everyone'.
The invoice also has all components of the bike listed as separate items and shown as 'free' - so local customs are demanding a price for each component so they can add local vat and duty to everything (and no, they won't see sense and understand they're all included in the value of the bike).
I'm now stuck with accepting a £300 mystery fee for buying from overseas, plus VAT on top of the whole lot, as well as an almighty fight with both planet X customer services (who don't really seem to understand their own charging regime) and local customs (not a fun way to spend the days) to get a valid invoice so I can actually import the thing.
Very, very disappointed and quite likely I will just chargeback the purchase and get DHL to return the bike, as it seems that planet X are incapable of supplying correct documentation for either billing or export.
My advice: DO NOT buy from Planet X if you're overseas until these issues are clearly resolved. They will rip you off and hang you out to dry, hiding behind 'once we've shipped it nothing is our fault'.
Following a review of their merino socks on this site, I checked out the La Passione website, who are based in the EU.
There's a banner link about Brexit which takes you here -
https://uk.lapassione.cc/pages/customer-care
There's a brief explanation about VAT on items over £135 and courier admin charges which may apply. Also, a link to the U.K. Gov website in order to claim it back (the VAT, not the admin). 'Good luck with that' I thought.
P.S. The socks are even better value in the multi-pack!
zero_trooper - the rules as I understand them from HMRC are that any VAT correctly charged can be reclaimed, if a reclaim is justified. However, if a supplier has applied an incorrect VAT rate then it cannot be reclaimed from anyone other than the supplier that made the error. In the case of exports to/from the EU the correct rate as I understand it is 0%. I already received a charge from DHL (VAT plus their fee for clearing it) and confirm that the "may" in your message is more likely a "will", but you takes your chances etc...
You can only "claim back" VAT if it was actually charged, and charged incorrectly. If all PlanetX do is raise the base price of the product so that it matches the "UK VAT paid" price (whilst then applying a 0% rate VAT charge) then there is nothing to claim back. No VAT would actually have been paid by PlanetX. They simply stiff EU customers with increasing the base price and thereby leaving them with an even larger duty to pay, plus an even larger EU VAT liability...
Wouldn't it be easier if the UK was in a single, free market with its nearest neighbors, or something? just a thought.
In this particular instance, no, no it wouldn't.
https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross...
I don't understand what they mean by: “The price remains the same regardless of location, but it will not include a VAT element if you are not in the UK.”
Are they saying the customer pays the same £12 regardless, in the UK this is made up of £10 + £2 in VAT, but overseas the whole £12 is charged and PlanetX trouser the lot?
That's how I read it too. Bang out of order if that's the case.
Or perhaps the £2 is used for the additional admin costs of exporting to the EU.
Nothing here is particularly concerning, if there are no additional costs in sending to the EU competitors will beat them on price and they will lose market share.
It's far less concerning than the airside shops asking for your boarding pass so they can not pay the VAT if you are leaving the EU, with no price reduction to the customer.
It is concerning as there will be customers who continue to use suppliers unaware of recent developments and who receive a substantial surprise mid-way through the delivery process.
If there are additional costs of exporting to the EU then this should be reflected in a service charge and itemised on the invoice. What you suggest implies that this "additional admin" just happens to equate to the VAT that would have been declared to HMRC...
At the airport the customer at least has the ability to see the total price due and decide at the counter whether to continue with the purchase. The article from Alex here is just trying to make potential customers aware that there are likely some significant suprises heading the way of any customers buying across the UK/EU border, and those surprises don't have the "just send it back" type exit routes that sellers may suggest on their websites
Yes. That is what is happening.
Yes. ...it give a clear indication of where some of those Brexit votes actually came from. A good example of a company shooting itself in the foot for a short term profit. Then there is the angle that this now creates a vacuum on the EU bike market once the COVID rush subsides. The intentions of PlanetX to grow that they write about as part of their business strategy will be viable only if they set up shop in the EU. This leaves room for existing EU bike assemplers to fill that gap, which is probably already in the works
This seems well messed up, immoral, and and surely an accounting nightmare for them too. VAT is zero rated on exports, so it really is nothing more than a surcharge.
As mentioned in other comments, Planet X do seem to have lost their way as a company in the past 12 months or so, but they've done that and sorted themselves out before, so fingers crossed …
To be fair to PlanetX and many online retailers currently, the challenge is that they've had no real time to prepare for the changes, and if their ecommerce functionality is not set up for removing and adding VAT based on customer location, what are they supposed to do?
There wil be solutions out there I'm sure, but at a cost... Maybe PlanetX's European trade is not significant enough to justify the cost to upgrade / change systems to enable what everyone is thinking should be a given. Maybe they need time to switch over... if their current platform can't be upgraded, then that means a large scale migration of their IT systems.
As someone has already alluded to, this Brexit business is a complete f#cking disaster... why oh why should countries futures be decided by uneducated knuckle dusters? We've properly stuffed ourselves here.
Well, they appear to have managed to keep the UK VAT part for their own pockets, whilst not claiming on invoice that UK VAT applied. Hence, this "time to change" excuse does not fly
I'd suggest completely the opposite. They have taken the action they can without a new system able to support anything more complex.
I'm sure some systems might already be set up to handle international VAT charging, but the vast majority are not ...yet.
How do you propose Planet X realise what you are expecting to be easy, without a system that does this automatically?
Do they charge VAT on everything, and then manually reimburse everyone outside of the UK? Or, do they not charge VAT for everyone and then ask UK customers to cough up an extra 20% post check out?
There has been no time to prep for this, and hence here we are.
That aside, the whole point of these changes is to curb international online retailing, so if you don't like it the changes are having the desired effect.
The Border Operating Model was first published in July 2020, and I understand that by the October update it was clear enough.
https://www.gov.uk/government/publications/the-border-operating-model
Greed on Planet X's part. Pure and simple.
Well, PlanetX write that they have had time to prepare for not invoicing VAT on EU deliveries. If they had time to do this then they had time to not charge customers for it. What they are actually doing is charging the same total amount to their customers (as though VAT were applied), but then simply keeping that money. If the "there has been no time" approach were valid, why not just temporarily pause EU deliveries and orders until they sort it. If they want to supply to the EU post-Brexit then why not charge those customers the same net price for the goods? Any admin fees should be transparent and itemised. Otherwise it just looks like a temporary attempt to profiteer from such customers for that one last time (before the delivery surprise arrives and those customers dissappear over the horizon forever...)
Your speculation is incorrect though - they can and do issue zero-rated VAT invoices showing the price you pay less VAT and zero-rated VAT. So there is no reason they could not collect the price shown on the VAT invoice.
What actually happens is they charge 20% higher prices and issue a VAT invoice in a different amount.
Brexit, the gift that keeps on giving. Not.
As we can see here, it's the complexity and admin that prevents trade, as much or more than the tariffs and charges.
Boris Johnson said there were "non non-trade barriers" when dealing with the EU, but Boris Johnson is a liar.
Despite owning 2 Planet X bikes, I'm losing faith in them at the moment as they seem to have lost the plot since becoming employee-owned. This is not some crazy capitalist rant; I'm no fan of money-grabbers, but their bike and frame prices have gone up exponentially in the last 18 months. I had an EC-130 frame which I built up myself. I paid 750 for it in the summer of 2018. The same frame is now 1200. Brexit is utter w@nk but not even Brexit or inflation can explain that price hike. Very disappointing.
Maybe, but any supplier with just an ounce of foresight would realise that this COVID demand spike will not last forever. The customers who get a shock of an additional 16% + 14% + fee on top of the price they expected to pay are likely to stay away long after the COVID demand spike. Rose stopped all supply to the UK quite openly at the end of last year, which not ideal for their existing customers is at least transparent and fair to all. This article makes it very much clear that it's "buyer beware" when dealing with PlanetX
I wanted some of their lobster gloves a few years ago, great price, I thought I'll have those, around 15 pounds if I remember correctly. When checking the delivery charge though they were asking around 20 pounds to send them to Japan when it should really only cost around a fiver. Fair enough, it's their choice to charge that if they want but it seemed like a cash grab to cover the cheap price. I ended up buying elsewhere.
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